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What to Do If I Have a Bad Credit Rating

| In Buying Guides

In an ideal world, everyone would have a great credit rating. Unfortunately, that is not the case. When it comes to buying a car, finance is a very popular option, and your credit score is key to getting your car finance approved. A poor credit rating can be the reason car finance is no longer an option for plenty of people. 

If you have a poor credit rating you may already be dreading stepping into a car dealership. With our helpful tips, you can rest assured you did your very best to qualify for finance. Here are the 3 best ways to fix a bad credit score.

Fix Credit Score By Boosting Your Credit

If you know you have a bad credit rating then the most important thing that you can do is to build on it to show lenders that you are reliable and will pay back the money that you owe. 

The best way to do this is to get a credit building credit card. These are cards that have low limits such as £250 and a very high-interest rate. This gives you a great opportunity to show your trustworthiness to the banks with little personal risk. There are plenty of companies that offer such cards: we recommend you browse around and find the best option for your financial needs.

Build Your Credit History

Banks and lenders will instantly review your credit history to find out your history of repayments and whether or not you are in a good position to be granted finance. So the first step on how to fix a credit score is taking a look at your own history.

Banks review your credit history in a few ways, but one of the simplest ways for you to anticipate any problems is to do a free online credit check. You can do so online, and if any red flags occur analyse the following: your payment history, your credit utilization rate, credit types you've had and are currently using and the number of recent hard inquiries. If any of these values are the root of the problem, do your best to fix them prior to requesting a loan. 

You can also build your credit history by having a cosigner who has good credit or becoming an authorised user on someone else's account.

It is important to note that if two people are applying for car finance together, then the lender will take both of their credit histories into account. So if one person has a bad credit history, it will negatively influence the joint application (even if the other person’s history is perfect).

Maintain a Good Credit Score

An essential part of how to fix a bad credit score, besides paying your bills on time and paying down your debt, is using a personal credit tool to keep an eye on your personal finances. This allows you to protect yourself should the unexpected happen. If you are incorrectly charged by something that you did not sign up for, then spotting it and contacting the appropriate person will protect your credit rating.

As any self-employed person will tell you: it’s vital to carefully watch your own tax payments. Failure to keep on top of your own tax indicates to lenders that you are not a trustworthy candidate for finance. Even though careful bookkeeping will take up a bit of your time, it is extremely important for your credit rating and will likely save you lots of hardship in the long run.

See what credit options Cragiant can provide by visiting our used car finance page.